Co-operation is best route to mutual prosperity for our region

March 23, 2017
by Joe Robb

Author: Andrew Robb
Publication: The Australian

The visit by Chinese Premier Li Keqiang is warmly welcomed; it is yet another important step in further strengthening the bonds ­between our two countries. The mutual ­respect that regional peace and stability is built on is a product of such personal engagement at every level. Too much is at stake not to do so.

So what is at stake? There are now about 600 million members of the middle class from India through to China and all the countries in between. In 20 to 25 years, this figure is expected to rise fivefold. You have no doubt heard some variation of this line — or I hope you have, as I used it ad nauseam in my previous career.

That’s 2.4 billion new people in 20 to 25 years who expect higher quality food and good services such as education, health, finance and law, travel and holidays and entertainment.

Notwithstanding all this, there is an apparent lack of awareness, much less interest and response, among so many Australians, and of many at the big end of town who should know better, about the ­profound transformation that is taking place.

Ever since the European settlement of Australia, most of our economic and cultural focus has been 19,000km away in Europe or the US.

Of course, this started to change with the trade with and ­investment from Japan in the 1980s, and accelerated greatly with the re-emergence of other Asian countries, particularly China, South Korea, the ASEAN nations and India.

I say re-emergence because for 18 of the past 20 centuries, China and India shared, occasionally with others like the Turks and the ­Romans, the economic and political centre of gravity for the globe.

I believe that sometime this century both China and India will inexorably return to sharing the global economic and political centre of gravity — but this time with the US. Already the major drivers of world economic growth are the Asian countries, with China alone contributing ­between 30 and 40 per cent of world growth. This leadership in growth from Asia is likely to be a constant throughout this century.

Australians now live in a region of the world that is undergoing an economic phenomenon and a ­humanitarian miracle that has ­removed more than 500 million people from poverty — in our own backyard.

Australia has benefited enormously from this, particularly through the sale of resources and energy, agricultural products, education and tourism services. Eight of our top 10 trading partners are regional neighbours. Yet our business and cultural engagement with the region amounts to little more than the sale of these goods and services.

Despite two million Australians speaking an Asian language in the home, our cultural awareness is meagre, our Asian language skills are still largely non-existent and our investment levels in the region embarrassing.

We must face the fact that many of our large businesses have become fat and lazy. After a quarter of a century of uninterrupted economic growth averaging 3.3 per cent — much of it a product of our geographical good fortune — we are seeing all the signs of having it too good for too long.

Our large oligopoly markets reduce competition. Our corporate climate is deeply conservative — increasingly enforced by government decision to have so many independent non-executive direc­tors. Our golden opportunity to set Australia up for another century of prosperity is being squandered. We trade with the region but mostly don’t engage with it.

The next decades can be spectacular if we take a big breath and move out of our comfort zone to help the region reach its full ­potential by positioning our ser­vices in the countries around us, often in joint ventures.

Our clean, green and healthy agricultural produce is viewed as gold standard. China has 20 per cent of the world’s population and 7 per cent of the world’s water, 63 per cent of which is deeply ­polluted — and some of it will be this way for centuries.

The Chinese people don’t trust the food they produce locally. Similar stories abound, and they are opportunities for Australia. What is not well recognised here is that our services are also gold standard: health, aged care, education, financial, water management, engineering, agriculture.

With the digital age, and the connectivity and cheaper convenience of 40,000 aircraft in the world’s skies at any one time, even many of our small and medium enterprises can more easily take their services into the region, often in a joint venture.

This lack of engagement in Australia is not helped by endless commentary couched in terms of which country will remain, or ­attain, the position of dominant global or regional power.

We see endless propositions and questions being raised about: Should Australia strengthen, or weaken, the alliance with the US? Will China rule the world? Should the US remain the dominant global power?

So much of this binary, black and white approach to power-sharing in our region seems ­designed to deliberately create straw men, which are then torn down with the result of unnecessarily fuelling regional tensions.

In my view, John Howard captured the right path for Australia while remaining true to our long-running and successful alliance with the US when he said: “You don’t have to lose one friend to make a new friend.”

Yet in many quarters the issue is being conducted like “two bulls in a paddock” where every muscle twitch, every action, is analysed for adversarial intent.

In all of this, Australia often finds itself the meat in the sandwich, being urged to take sides by both sides — whether it be issues such as the Asia Infrastructure ­Investment Bank, the South China Sea issues or the One Belt, One Road project.

The facts are that the US is our biggest investor by a large margin, as well as being our alliance partner, while China is our biggest trading partner by a large margin, with scope for much more commercial engagement through the first major free trade agreement between China and a large, advan­ced exporting economy, Australia.

Our prosperity relies critically on both countries. No ­approach makes sense other than the one Australia has adopted, namely seeking to be a constructive partner of both countries, and of other states in our region. A constructive partner should be free to voice its desire to see a rules-based system adhered to and to run a policy towards partner countries based on national interest — to exercise one’s sovereignty.

The “two bulls in a paddock” approach fuels regional tensions: it ignores the medium-term re-emergence of India as a major global power; it ignores the instability that such an approach engenders in our region; and it ignores the potential destruction of the oppor­tunity for billions of people to see prosperity flow from the biggest economic phenomenon experienced by Asia in more than a millennium.

Every effort by the US and China should be made to engage in a comprehensive way that seeks to build mutual trust.

While tensions and differences always exist between major powers, and smaller countries for that matter, there is no reason to ­assume that to accommodate China and India’s eventual re-emergence as great powers, we need to sacrifice our sovereignty and liberal democratic values.

Much of world history is ­defined by major powers finding effective ways to share power. This is the way forward; and so we have warmly welcomed Premier Li’s visit.

Andrew Robb is chairman of Asialink and a former federal trade minister.
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